One of the little sidebar stories in the McDonnell trial has been Maureen McDonnell’s purchases of Star Scientific stock (“STSI”). There is nothing specifically illegal associated with the purchases, but when you think about the conflict of interest issues, and about the financial acumen of the McDonnells, consider the following chronology:
June 1, 2011 — Maureen McDonnell buys 6,000 shares of Star Scientific stock at about $5 a share, for $31,079. She used $50,000 that Jonnie Williams had loaned the family to help with their crushing debt load; Jonnie later testified that he was surprised to learn that his loan had gone to buying STSI stock.
August 1, 2011 — Maureen and Jonnie Williams fly to Florida to speak to investors.
August 2, 2011 — Maureen buys another $2,000 of STSI; the stock price is about $2.20. Her initial investment of $31,079 was now worth $13,333; in two months, it had lost more than half its value. But around that time, Williams and the McDonnells were planning the August 30, 2011, “product launch” lunch in the Governor’s Mansion; presumably Maureen was confident that this would make the stock go up again.
December, 2011 — Maureen sells all the STSI stock so that it wouldn’t have to be disclosed on the Statement of Economic Interests that Bob had to complete, showing all investments as of December 31, 2011. The stock is sold at a loss of about $20,000.
January, 2012 — Maureen buys the stock back. She sold it again in late 2012, so that it would not have to be disclosed on the Statement of Economic Interests. It had lost another 25% of its value, roughly.
Here is a chart of STSI prices by quarter, taken from their 2012 Annual Report at page 27:
2012 2011
Quarter High Low High Low
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4.18 $2.13 $4.19 $1.56
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.96 2.66 5.35 2.97
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5.05 3.21 4.60 1.50
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.58 1.56 3.20 2.00
The stock price declined throughout 2012; its yearly low was $1.56, in December, 2012. In 2013, the price continued to decline, ending 2013 at about $1.00 per share. It is presently trading for about $.50 a share.
Reading the annual report, it is hard to see why Maureen would buy this turkey of a stock, unless she thought that she had some inside information. Or unless she believed Jonnie Williams and his claims for Anatabloc. Or unless she had some other reason to want to be a shareholder of STSI.
